Over 50s: beware of ISAs aimed at you

From tomorrow, new tax-free savings limits kick in for anyone aged 50 or over on 5 April 2010 – so if you are 49 and a half, this affects you too. Isa limits for these people will rise from the current £7,200 to £10,200, with up to £5,100 allowed in a cash Isa.

As a result, banks and building societies have launched a wide range of deals with labels that suggest they are aimed at older savers. But, as is so often the case with financial products, a lot of this is just marketing – most of these “specially for the over-50s” products aren’t any good.

For example, Principality Building Society’s 50 Plus Fixed Isa pays an unimpressive 3.8% until June 2012 – that’s 0.4% less than its standard one-year Isa

So don’t be suckered into investing your money in these accounts when the chances are you’d get a far better deal with an ordinary Isa. The rules on Isas can seem complicated but that’s no reason to get bamboozled into taking out an Isa with a poor interest rate. See my article from last week for a full explanation of the new rates: Protect more of your money from the taxman.

Also, it might be worth waiting a week before investing, because by then all the new deals will be out and competition may have driven up the rates available.